Category: Intellectual Property

Online Piracy More Sophisticated and Insidious Than Ever

I haven’t written about enterprise scale piracy in a while. Not because it’s gone anywhere. Quite the contrary, it’s still growing. But it is easy to feel as though all the major points have been covered, that there is nothing much new to say on the matter. Somewhere on this blog, there is at least a post or two responding to just about every rationalization for piracy, and there seems to be little value in repeating most of that. But a new report released by Digital Citizens Alliance, in collaboration with NAGRA Kudelski, does reveal a couple of new topics that deserve the attention of consumers, law enforcement, and policymakers.

The report titled Money for Nothing focuses on the multi-billion-dollar trade in illegal Internet Protocol Television Services (PS IPTV) that DCA currently estimates to be worth at least one billion dollars annually from U. S. operations alone. In a nutshell, the consumer sees an ad, often on a social media site, that offers hundreds, or even thousands, of channels for an inexplicably low subscription fee. The customer buys a black box similar to a cable converter that is typically preloaded with firmware that will stream material (both live TV and recorded motion picture content) that is illegally obtained worldwide through a vast network of pirate server operators.

On the one hand, a consumer who takes an offer to access that much material for $10-$15 a month ought to know something ain’t right; but at the same time, I think about the number of senior citizens who so often fall prey to what would seem like obvious scams. And given the dramatic ways in which TV viewing has changed in last decade or so, it is plausible that many a Boomer might believe these services are legitimate. After all, these illegal services look very slick, with on-screen user interfaces that work just like legit services. And isn’t piracy about free access?

“Because subscribers are paying someone for the content, and because the storefront websites and apps are often well designed, and posing as legitimate, some consumers may believe they are using a legal service.“

The DCA/NAGRA report estimates that there are about nine million American households currently subscribing to pirate IPTV services, and this is a significant number relative to subscription TV overall. In 2013, there were an about 100 million households subscribing to pay TV, today that number is about 86 million, and it is predicted that by 2023, this number will drop to around 73 million subscribers.[1] Those stats measure traditional paid “cable” services and do not reflect how many households have “cut the cord” but also switched to other paid services like Netflix, Hulu, Amazon Prime, etc.

For instance, Netflix enjoys 167 million U.S. subscribers, and most customers subscribe to more than one of these services, suggesting that willingness to pay for TV and film entertainment is still fairly healthy overall. At the same time, however, nine million pirate IPTV users in a dynamic market is a number to keep an eye on, and it would be useful to have some insight into both the motives and the general understanding among these subscribers. Are they belligerent and still rationalizing piracy? Are they naïve and don’t know that they’re subscribing to criminal organizations? Are they viewers who “cut the cord” but simply want cheap access to TV channels, etc. in addition to the major streaming services?

Whatever the motives or attitudes may be for subscribing to these services, both consumers and law enforcement should be aware that, in addition to harming legitimate production and distribution models, pirate IPTV providers are one part of a whole smorgasbord of online criminal activity. As DCA has reported in the past, piracy sites are honeypots where a visitor has a roughly 30% chance of contracting malware that can be used for identity theft, ransom schemes, spying on households by controlling devices, or directly obtaining money, credit card numbers, or passwords.

Moreover, the new reports states, “NAGRA also found a scheme where the residential Internet connections of pirate IPTV customers are turned over to others – who could potentially use them for illegal activities, such as accessing child pornography, committing fraud, or participating in cyber attacks.” What that means is that the IP addresses of the subscriber base can be tasked as a distributed VPN used by criminals to hide their tracks while engaging in various illegal activities.

So, not only does a pirate IPTV subscription help support cybercrime, but subscribers themselves can wind up implicated if their IP addresses are used in connection with certain activity. So, it is not farfetched to think that paying $10/month for that all-access pass can result in a knock on the door by authorities wanting to question the subscriber about accessing child pornography or some other crime far worse than media piracy. And it cannot be a fun conversation to alibi a major crime by admitting to a lesser one.

 The Money for Nothing title derives from the fact that even the smallest players in the IPTV “industry” can generate substantial profit margins from relatively little investment—because of course they don’t bear the cost of licensing the material they distribute. One irony that’s hard to miss in this regard is that DCA describes a hierarchy of retailers buying distribution credits from wholesalers, which is fundamentally a licensing scheme, albeit for contraband material. Funny how permission is a constant, even among a network of thieves.

As consumers continue to change their viewing habits, and legitimate creators continue to adapt to the changing market, DCA and NAGRA are right to ask that policymakers track the development of these unlicensed IPTV services. Even if they were not directly antagonistic to legitimate distribution models (and they are), they remain intertwined with trafficking, extortion, child pornography, identity theft, and other forms of cybercrime. And nine million supporters of that activity is a lot more than too many.

[1] Source: Statista.

UPDATE: As originally published, I made too casual use of the term IPTV without the qualifier “pirate.” There are legal IPTV services. Thanks to Hugh Stephens for the note.

The Internet Industry Should Not Pick the Next Register of Copyrights

Even under normal circumstances, anyone can be forgiven for missing the memo that by the end of this month, the Librarian of Congress, Dr. Carla Hayden, will make her pick for the new Register of Copyrights. The process has been going for so long that I assume that at this stage Dr. Hayden has her choices down to a handful of candidates or fewer on the shortlist. And while I do not know who the candidates are or, therefore, anything about their views on copyright, I do know that there remains a substantial effort by well-funded parties to alter the foundational principles of American copyright law. And not in the interest of creators or society in general.

Ever since the internet revolution promised to “make the world a better place,” the aggressive headline adopted by copyright’s most prominent critics has been that “copyright is broken” and needs “rebalancing” in the digital age. Unfortunately, this egalitarian sounding notion has proven to be insidiously unbalanced, skewed toward the interests of major internet platforms to the continued detriment of authors of creative works. Especially independent authors.

By any sensible observation, the big internet companies are doing just fine, while creators’ rights are being trampled in cyberspace. So, if there is truly any rebalancing to be done, it cannot justifiably be a recalibration toward a more platform-friendly direction, as evangelized by many prominent academic and institutional copyright skeptics.

Technological Change is Nothing New to the USCO

But even if those market realities were not plainly observable, any suggestion that the next Register must be more adept than their predecessors at “balancing” new technologies with the rights of authors should be dismissed as ahistorical rhetoric. Balancing technological innovations with the rights of authors is not a novel core competency for the U.S. Copyright Office. From the moment the first Register was appointed in 1897, the newly created Office began immediately grappling with the technological inventions that were already transforming the nature of copyright in the late nineteenth century, and which were about to catalyze a wealth of diverse cultural expression in the twentieth century.

Register Thorvald Solberg, who was not even an attorney, was arguably the principal architect of the 1909 Copyright Act, the first truly modern (i.e. technologically savvy) copyright law, not only in the U.S., but possibly in the entire Anglo/American copyright lineage up to that time. As scholar Zvi S. Rosen notes on his Mostly IP History blog, Solberg diligently studied every extant and proposed copyright law in the United States between 1789 and 1904. At the same time, this deep dive into the purpose and nature of copyright was contemporaneous with rapidly changing technologies that were dramatically transforming the creation, distribution, and use of works of authorship.

Advances in printing methods, photography, phonographs, motion pictures, and player pianos all contributed to a technological revolution no less provocative at the threshold of the twentieth century than the arrival of the public internet and related digital technologies have been at the threshold of the twenty-first. But until the 1909 Act, prior revisions to American copyright law were somewhat ad hoc legislative tweaks that had yet to truly reckon with the changing nature of a law that originally protected maps, charts, and books.

For instance, when photography was added in 1865 and then challenged as a protectable medium almost twenty years later, arguably nobody in Congress had really considered the nature of authorship in this first mechanical means of creating images. Today, many of the themes from that seminal confrontation with photography are repeated as we consider the implications of new machine-made works in an age of artificial intelligence. Thus, the contemporary technological landscape may be fresh ground for legal theorists, but it is not wholly uncharted territory. “The Register of Copyrights has long been tasked with dealing with the intersection of copyright law and technology,” Rosen commented to me by email. “In fact the 1909 Act’s adoption of technological neutrality – use of ‘all the writings of an author’ instead of an enumerated list of types of works – represented a recognition that the Register would be tasked with evaluating whether a new type of work was a writing of an author.”

Solberg’s historical analysis of the entire legislative history, including the thinking behind every proposal up to 1904, set the tone for what the role of the Register would become—not just a chief clerk managing registrations and deposit copies, but a thought leader helping to define the contours of copyright law in context to the dynamic ways in which works may be produced, used, and made available. The next Register should be someone who keeps faith with this tradition, and certainly not someone who sees the Copyright Office as a forum for radical revision of legal doctrine, under the misguided belief that the digital age asks unique questions rather than variations on familiar themes.

Changes in Distribution Methods Do Not Upend Copyright’s Principles

Although the most powerful internet and technology companies like to tell us that their platforms and apps “change everything,” we must remain mindful of the fact that many of these shiny new toys have actually been less revolutionary in a copyright context than the technological changes emerging during Solberg’s tenure. After all, most internet platforms are primarily just new methods of distribution (or in copyright terms “making available”) and this hardly recommends a holistic rethinking about copyright’s nature or purpose.

For example, Spotify and other music streaming platforms, while nearly obliterating both broadcast radio and recorded music, have in no way altered the nature of music making or the cultural value of music listening. But these companies have exploited pre-internet copyright regimes in order to direct most of the financial value in sound recordings into their coffers, while leaving most music creators a pauper’s stake in the all-digital market. So, just in regard to this one category of creative works, any suggestion that copyright needs “rebalancing” in favor of the internet giants is as immoral as it is economically untenable.

Claims of Imbalance at the USCO Have Been Greatly Exaggerated

Readers may remember (though it seems a trifling matter today) that when Dr. Hayden was first appointed Librarian in 2016, the anti-copyright crowd became positively giddy at the prospect that she was a crusader determined to fix everything they allege to be “broken” in copyright law. I wrote at that time that the Librarian has never been the de facto copyright expert in the United States—not when Librarian Ainsworth Spofford first consolidated registration under the control of the Library in 1870, and not when the Register position was first created in 1897.

That same misguided anticipation of Dr. Hayden as presumptive copyright “reformer” practically effervesced when then Register Maria Pallante was rather suddenly, and mysteriously, dismissed; and this was because Pallante had become the focal point for copyright critics endeavoring to accuse the Office of being “culturally captured” by major rights holders. But even a peek under the surface of those claims suggests that anyone in the Register’s position who was (heaven forbid) a proponent of copyright, would have been likewise accused.

For example, in contrast to many shrill accusations of cultural capture and bias in the DMCA Section 1201 Triennial Rulemaking, I would challenge anyone to read the reports and show how the USCO has failed to largely favor petitioners seeking reasonable exceptions under those provisions. Or one could look to the USCO brief in the Fourth Estate case (2019), siding with tech industry and library amici on an important procedural question of registration. The list goes on, but the point is that we are justified in asking whether certain parties really want a “more balanced” Register or want a Register who is ideologically hostile toward copyright?

That question may be rhetorical, but it is no exaggeration. It alludes to a longstanding and still simmering debate in copyright history. Those who view copyright as a necessary evil—as a mere privilege granted to authors in order to get what society wants from them—naturally approach the law quite differently from those who view copyright as a matter of justice, a natural right of creators, but one with certain limits. The truth is—and public opinion supports this all the time—copyright is a bit of both. Most people, even if they are not versed in the law, consistently show that they discern both the inherent justice of authorial rights and the utilitarian nature of market incentives to produce and distribute works.

As I say, I do not know who the Register candidates are. But to the extent that Dr. Hayden seeks a fresh perspective in the current market, I hope she understands that where new legal thinking is needed, it should be to ask how we can better protect individual authors against massive, exploitative technology companies. And certainly not the other way around.

Photo of Minerva. Handy, Levin C, photographer. Congressional Library. Minerva. Washington D.C, ca. 1897. Photograph. https://www.loc.gov/item/2013646342/.

Rockin’ in the Free(booting) World: Neil Young v. Trump for America

Recent reports that Neil Young is no longer asking or insisting that the Trump campaign stop using his music, but is instead suing Trump for America for copyright infringement, highlights the extent to which this longstanding controversy between artists and politicians has heated up in recent years. It is a subject that overlapped recently in the Senate IP Subcommittee hearing on the DMCA and fair use.

It is too early to say whether Young’s infringement complaints against the Trump campaign have legal merit because this will depend on facts we do not yet know for certain. For instance, when a candidate (or anyone) publicly performs recorded music, this is typically covered by performance rights licenses that are either paid by the venue(s), the party(ies) using the music, or both. These licenses are compulsory, meaning the copyright owners cannot refuse them as long as the users are in compliance.

But if a political campaign uses music in a commercial, or even uploads video to the web that was captured at a live event (e.g. the candidate waving at the crowd while a specific song plays), that requires a whole other license, and one that is not compulsory. Further, if a candidate uses a song in such a manner that it begins to acquire the feel of campaign theme music (e.g. “Don’t Stop” and Clinton), the creator(s), if they do not wish to endorse the campaign, can sue under the Lanham Act for infringement of their right of publicity. As yet, Young has not asserted his publicity right, and it remains to be seen what will be discovered vis-à-vis his copyright claims against Trump’s use of the songs “Rockin’ in the Free World” and “Devil’s Sidewalk.”

Of course, none of the legal technicalities quite get to the heart of the matter for musical artists. After the Trump rally (flame-out?) in Tulsa, the Rolling Stones and the Estate of Tom Petty also demanded the campaign stop using their music, with the Stones at least threatening to file suit. And even though the performance rights licenses technically cover campaigns in most cases, there is something to be said for the fact that the original purpose of those licenses was primarily to cover entertainment music as a medley of tracks played at a public event or at a restaurant or bar—or a venue like an open mic where guest musicians might perform a variety of cover songs.

All those uses are clearly different from a scripted moment at a campaign event, when a political operative intentionally plays a song on cue, with the purpose of galvanizing the crowd or emphasizing a particular theme or attitude—and usually based entirely on the chorus. On that note, it is germane to this topic that the only way to harmonize Trump’s idea of American exceptionalism with Neil Young’s verses about junkies and children suffering in the streets is if those dark images represent a kind of mission accomplished statement by Trump and his acolytes.

More likely, Trumps use of “Rockin’” is a classic case of political figures (or corporate users) playing a song solely for its chorus while ignoring the verses. Only in this instance, it happens to be profoundly Trumpian to completely miss the fact that Young is being sardonic, saying that the free world ain’t exactly rockin’. More bizarrely, Young takes direct aim at the “kinder gentler” rhetoric of George H. W. Bush in 1989, which was, in reality, both kinder and gentler than the raw mean-spiritedness and blatant ignorance of the Trump administration. Of course Neil Young doesn’t want his song prominently associated with Trump’s message. And, it turns out, neither do a lot of popular musical artists.

As discussed in this post about Mike Huckabee being sued for using the song “Eye of the Tiger” (which his campaign settled for $25,000), when orchestrated political theater appropriates a musical expression to incorporate into a given message, this does bridge the artist with the politician. In copyright terms (although there is no such license), one can almost think of these moments as “live synch” events. And invariably, these moments are now all captured on video and uploaded by a campaign to their social pages, where they become literal “synch” events that require the aforementioned non-compulsory license.

Given the fact that the compulsory performing rights license was the result of the DOJ finding both ASCAP and the NAB guilty of anti-trust practices back when radio was new, it is little wonder many music creators want to reform or abolish the compulsory license regime. And if there were ever a serious conversation about such reform, it should naturally influence the evolving dialogue about the use of works by political speakers in the digital age. Copyright is not exclusively about compensation; it can also about preserving the integrity of expression and proscribing the misuse of an expression to make statements anathema to the artist’s vision.

That should not be confused with a fair use that an artist may despise, either because the use is critical, parodic, or transformative in some way that the original creator finds personally offensive. Political uses of works, like those at issue for Young, do not generally fall into these types of fair use considerations.

In my post about the fourth DMCA hearing before the Senate IP Subcommittee, I mentioned that attorney Matthew Sanderson called political use of works “paradigmatic fair uses.” But notwithstanding the limitations of congressional testimony, I would argue that was too broad a statement by some margin. Just because political speech is paradigmatically protected speech under the First Amendment, that principle does not make political use more amenable to a finding of fair use. Under factor one of the fair use test, the purpose and character of the use, a political campaign should not (and very likely would not) be afforded any more deference than a news commentator, a critic, or a creator adding new expression to the original work.

In fact, I would go a step further and say that political campaigns have less in common with exemplary fair uses and are more comparable to ordinary marketing and advertising of goods and services. That is, after all, what a political campaign is:  marketing a candidate. And advertising is almost wholly incompatible with fair use, as it is arguably the paradigmatic forum requiring licenses to use creative works. Add to this the fact that there are rules prohibiting misrepresentation in advertising a can of paint and no rules requiring a politician to tell the truth, and of course copyright owners are going to bristle at unlicensed uses of their expressions in political messaging.

So, if it turns out that Trump for America lacks the relevant licensing at issue in Young’s lawsuit, the campaign would (and should) have a hell of a time trying to present a fair use defense. Huckabee attempted to do so in the above-mentioned example by claiming that his playing  “Eye of the Tiger” at a rally for Kim Davis* was for a purely religious rally (for which there is a statutory exemption) that was not part of his campaign. But the fact that Huckabee for America settled for twenty-five grand suggests that his legal counsel did not see a viable path forward in Huckabee’s sudden appetite for the separation of church and state.  

If I interpret the nature of Young’s complaint correctly, it is similar to the Huckabee example—that “Rockin’” in particular was not just played as background music but was prominently and repeatedly performed such that Young’s voice has been too-often used to speak for Trump. In the end, copyright litigation may or may not offer the remedy the singer/songwriter seeks, but it should be clear that the use of creative works in political messaging can very easily cross the line to become coerced speech. So, whatever the best remedy might be, any defender of the speech right and authors’ rights should agree that a remedy is needed. 

*Davis was the Carter County, KY clerk who was jailed for refusing, in contravention of the law, to provide a marriage license to a same-sex couple. Huckabee staged a support rally for her outside the Grayson, KY detention center on the day of her release.